Reaching the right audience to increase conversion or engagement is getting harder and it seems many of us are burning cash just to drive traffic and report vanity metrics.
We recently undertook research into marketing forecasts and budgets (soon to be published).
What we’re seeing is almost a third of respondents revisit spend just once a year or less and more than 50% no more than twice a year.
What? We “set and forget” our marketing budget?
We’re effectively taking our pocket money and blowing it at the sweet shop.
The majority of businesses have the ability to truly understand how effective their digital marketing and advertising is, but it seems like they don’t bother, or they believe it’s too hard.
We all moan that we don’t have enough time, resource and budget. Yet, if we channelled more energy into thinking strategically about forecasting where we spend our budget hour by hour, day by day, week by week, season by season we’d likely have the right budget, because we defined it.
It wasn’t handed to us.
We’d have the right resource because we allocated it in the right way.
We’d have enough time because we planned it.
Maybe you do all this already, in which case in our eyes you’re a Legend not a Loafer.
The other thing we’re seeing is how some marketers ignore or don’t realise the channels that are truly working best for them. Take email marketing for instance, it’s still the best converting channel for most transactional businesses, it’s easily automated, it assists retention and is great for re-marketing… but it’s not deemed as being sexy.
The thing is we have to get real about channel effectiveness and here’s why…
There’s a great post by Andrew Chen (Andreessen Horowitz) from a few years back where he states “start-ups are cheaper to build but more expensive to grow”
“…it’s getting more expensive to get traction, while at the same time, growth is getting harder from intensive competition, consolidation, and saturation.”
Now you might think wtf has start-up growth got to do with my business. Well, everything actually. if you’re an established brand you’re trying to maintain exposure, or you’re launching new products, services or business models in response to digital disruption.
“…companies building new products are evolving their strategies away from counting on traditional channels like virality, SEO, and organic, and more towards paid acquisition to scale…”
The ease with which new businesses, products and services are launched puts a lot of pressure on your budget, because it costs more due to the amount of competition.
So too does the number of available channels, over 120 apparently.
As Chen said then;
“…growth is also getting tougher from channel saturation, better competitors, and consolidated winner-take-all platforms…”
Think about that for a second, how will you compete as you get drowned out by saturation of content and VC money that’s supporting media spend driving up prices over time?
You have to have a better grip on where your cash and resourcing is going AND forecast spend to achieve a more accurate understanding of how much you need and for what channels and audience segments in order to grow…and get the budget you need to hit the target you own.
So, if you’re not already;
- Forecast your required budget – then you ‘own’ it and have a better handle on what’s truly working.
- Define your channels – through good analysis of tracking and reporting – you’d be surprised how much better your tracking can be.
- Test & Learn – What’s working and what’s not. Not just creative and copy but the channel itself, is the needle moving in the right direction (against any benchmark)
- Regularly, at least every three months, revisit spend – go back and look at what you spent, how effective it’s been and re-allocate accordingly to those channels that work best, but never settle on a group of channels and think you’re done.
- Benchmark – If you do the above you’ll also have some benchmarks to work with for channel activity and spend !
Do you forecast marketing spend? Do you know precisely what channels require what percentage of your budget allocation? And do you revisit your spend regularly?
If you need help building a forecast, or want to know which of your channels you should be maximising, or want to build some benchmarks, we can tell you, just ping us and we’ll walk you through it.
Additional update: Andrew Chen’s podcast Why paid marketing sucks, Network effects, Viral Growth, and more is here.
Also published on Medium.